Seven Common Beliefs That Are Ruining the Businesses of New Amazon Sellers

If you haven’t sold your first item on Amazon, congratulations! I am about to help you avoid some big mistakes. For my seasoned sellers, don’t be offended if you’re guilty of some of the common mistakes I am about to mention. They are rooted in logic and most sellers don’t realize that until they have experienced them firsthand. That means after wasting time, money and their account health! So, pay attention.

Oh, and the reason I know about these business killing beliefs is because I had most of them myself back when I started selling on Amazon two years ago.

I believe I may have said some of these things verbatim…

#1 “It makes $1, grab it, what’s wrong with making $1?”

If it really worked that way, there is nothing wrong with $1 (or any small amount), but it doesn’t always. When you leave just $1 of wiggle room, you’re setting yourself up for failure.

I am saying “$1”, but this refers to any small amount that leaves no room for price changes. The average seller (in my experience) won’t take less than a reasonable estimate of $3 per item profit. Each seller is different and their buying minimums are based on their available capital and tolerance for risk.

A lot can change from the time of purchase to processing to the actual sale.

There are other flaws in this logic. Each time that you decide to spend your money on a low profit item you are:

Tying up your capital. You could be spending your money (theoretically) on higher earning items.

Risking your account health for low return. Every time you sell a product, you are taking on the hassles that come with that product. Do you want to deal with the risk of negative feedback for products that aren’t making you any serious money?

Likely spending more than $1 worth of your time on prepping. Most prep companies charge around, you guessed it, $1 for basic handling. The $1 profit fails to respect the value of your time and will result in you working hard with little to show for it.

So, does that dollar still seem so enticing? Probably not.

Let’s move on…

#2 “I bought it from a retail store, it has to be authentic.”

Authenticity is in the eye of the buyer.

There are a number of factors that may lead a buyer to assume an item is inauthentic. Yes, many authentic products are wrongfully marked as “inauthentic” or “fake” but they are generally rooted in quality errors.

Want to reduce your risk of unmerited inauthenticity claims? Be prompt and courteous to your buyers if they have any questions about the item they received. Counterfeiters are not known for being accessible to their buyers. Showing you care and are available will reduce your risk of negative claims tremendously.

Many buyers make claims out of frustration or as retaliation for you not replying to them. Most buyers are reasonable and will allow you to explain yourself and your product before escalating to Amazon.

Also, retailers are at the same risk Amazon sellers are when it comes to buyer scams like replacing counterfeited goods in place of authentic ones and returning them. This is a form of “product laundering” (I may have made that up, but I see it a lot). At the end of the day, it is your responsibility to inspect your products for authenticity. Unless an item is completely sealed in tamper proof packaging, check it. No matter where you bought it from.

Or, don’t, odds are you’ll be fine, but at scale and over time, you are playing a risky game. I see sellers each week at EGrowth Partners who have been suspended for inauthentic claims from products they purchased at places like Ross, Marshall’s, TJ Maxx, Nike Outlets, Walmart and more commonly sourced retailers.

#3 “There are two listings, I’ll list against the one with a better price or better sales rank.”

Wrong. You list against the correct listing.

Which is that? The older one 9 times out of 10.

Selling against a more “favorable” listing is setting yourself up for failure. Don’t let yourself become blinded by opportunity and forget there are rules to follow. Failure to follow the rules may mean you’ll lose the privilege of being a part of the marketplace.

It should go without saying, but never create a new listing for a product to avoid competition on another. That is a recipe for disaster.

#4 “The listing description matches what I have, who cares if the picture isn’t exactly the same.”[Or Vice Versa]

The buyer cares, big time.

Even if you didn’t make an inaccurate listing, if you list against it, you’re just as accountable for any complaints you receive as they are.

So, does this mean you can’t do anything with this? No, if the lead is promising enough, and you understand what the listing is supposed to be, you can contact seller support and work to get the listing updated correctly.

Now, you have a good opportunity and you have done your part in cleaning up the marketplace.

Congratulations! Pat yourself on the back, you’ve earned it.

#5 “This sales rank is really good and it meets my profit minimums so it will be a good buy.”

These features are PART of all good leads, yes, but they aren’t the only things to look at.

Like how babies are people, but not all people are babies. Great leads have good sales ranks and meet your minimums, but not all products with good sales ranks that meet your minimums are great leads.

Sales rank is a snapshot in time, so the current rank may be a result of a recent factor.

The rank may reflect a lower price. An item selling 10 per day at $15 isn’t going to sell 10 per day at $30 (all things being equal).

The rank may reflect a seasonal purchase.

The rank may reflect a large single purchase.

So, how can you tell what is good? Keepa or CamelCamelCamel. All good scouting software should have easy integration with these sites.

While it isn’t cheap, I HIGHLY recommend you check out “How to Keepa Camel” by Stephen Smotherman. It will give you a good idea of what products are going to actually be selling well for you and which are a mirage.

#6 “Why would I help another seller? They are my competition…that’s going to hurt my business.”

This is such an unfortunate mindset. Instead of hiding your secrets (which are most likely less secretive than you think), try and focus on symbiosis.

When compared to sellers who seek symbiotic relationships and adopt an “abundance mentality,” lone wolf sellers will experience:

Slower growth

A lonelier journey to the top

Yes, your avoidance of others is actually going to hurt your business in the long run!

How to Share Information Do’s and Don’ts

DO: Find sellers who you trust and know have sound character.

DON’T: Work with any and everyone you come across. You can be selective.

DO: Share leads privately.

DON’T: Post leads in large open forums. These will cause chaos and isn’t appreciated by most communities.

DO: Share arbitrage leads.

DON’T: Collude on pricing or ever log-into each other’s accounts.

NOTE: If you do plan on logging in to your accounts while at each other’s warehouses or at different locations, I highly recommend you use a VPN. Amazon does track IP’s and logging in to multiple seller accounts from one location can trigger suspensions. I use a service called Hide My Ass, I like it because it allows me to connect to a lot more locations than other services and I work inside the accounts of clients in and out of the United States. but for a more cost effective option, check out: Total VPN

Oh sweet economics, how I love thee. This is a classic case of “sunk costs.”

I spent seven years in college and walked away with a degree in economics, so you can bet I will get my money’s worth and tie my posts into it!

You may know this concept better by the saying, “you don’t cry over spilled milk.” Although we like to think we are rational beings who make logical decisions more often than not, the sunk cost fallacy shows up a lot and makes us look very foolish.

While you never make a purchase planning on losing money, you need to open yourself to “losing” money by lowering your prices once you realize:

The product isn’t going to sell at what you expected anytime soon.

You need to get your capital back to reinvest.

If a product isn’t going to sell, it isn’t going to sell. Leaving an item in stock at an unrealistic price is costing you in storage, but most importantly, tying up your precious capital!

Cut your losses, regroup and reinvest the money into better leads. Good Amazon sellers know when they have made bad buys and they fix them promptly.

About the author

Nate McCallister

Nate is the founder and main contributor of EntreResource.com. He is a lifestyle entrepreneur who spends his time building businesses and raising his two kids Sawyer and Brooks with his beautiful wife Emily. His main interests include copywriting, economics and piano.